MUMBAI: Financial services firms have stepped up their cost-cutting drive in institutional broking units as declining trading activity and regulatory caps on brokerage fees have made senior executives with fancy pay packages unaffordable. Leading institutional stock brokers such as Religare, IDFC Securities, Deutsche Bank and Kotak Securities have recently asked scores of their senior executives to leave, especially those who were hired at steep salaries to drive their business even in a gloomy market.

But with market sentiment showing no signs of improvement, firms are under severe pressure to cut employee costs, which started at the junior level and is now spreading to the senior level. At least 18 senior executives across the four firms mentioned above have been asked to quit in the last month or so. The job cuts have been in research, sales, trading and operations. Also, one of the firms asked a senior official posted in the US to relocate to India.

In response to an email query, a Religare spokesman said, "Given the current macro headwinds and prevailing softness in the environment, we have been proactively conducting strategic reviews of our business.

There have been some role realignments and redundancies and, hence, we have seen a few exits, albeit insignificant in numbers, over the last couple of months," the Religare spokesman said.

Spokesmen at IDFC Securities and Deutsche Bank declined to comment while a Kotak Mahindra Group spokesman denied the story. "The information that you are referring to is completely incorrect. There are no job retrenchments that have taken place at the firm," he said. Though foreign institutional investors (FIIs), the biggest clients of institutional brokers, have pumped in over $12 billion since January, many firms, especially domestic, have not been able to secure much business.

This is partly because asset management companies and proprietary trading desks of large foreign banks have routed majority of their purchases through the group's securities broking arm. Also, brokers have been deprived of business from hedge funds and many of them have closed shop in the recent downturn.

"While trading volumes have reduced, even broking firms' pricing has come down. So, at a time volumes are lower and pricing is capped, there will obviously be a pressure on the costs of broking companies," said Rajeev Thakkar, CEO & director at Parag Parikh Financial Advisory Services.

Most broking firms had embarked on cost-cutting measures by trimming salaries in the last couple of years.